Steinmetz Trust Said to Hire Lieberman, Ex-FBI Head on Probe

Franz Wild, Jesse Riseborough and Andy Hoffman

September 11, 2014 — 10:26 AM EDTSeptember 11, 2014 — 10:26 AM EDT

The trust governing BSG Resources Ltd. hired former U.S. Senator Joe Lieberman and ex-FBI director Louis Freeh to run an internal probe of allegations the company bribed officials to win rights to the world’s largest untapped iron-ore deposit, a person with knowledge of the matter said.

The person declined to elaborate and asked not to be identified as the investigation is confidential.

The internal inquiry will add to investigations in three countries of how Israeli billionaire Beny Steinmetz’s company obtained rights to half of the Simandou iron-ore deposit in Guinea. BSGR is also defending litigation from Rio Tinto Group in a U.S. federal court for allegedly conspiring to steal Simandou.

BSGR denies any wrongdoing in connection with gaining the permit. A spokesman for the company declined to comment. Former U.S. vice-presidential candidate Lieberman didn’t immediately respond to phone calls and e-mails sent via his executive assistant seeking comment. Freeh didn’t respond to e-mails and phone calls to the offices of his consulting firm in Washington and New York.

BSGR is indirectly owned by the Balda Foundation, a trust of which Steinmetz and his family are among the beneficiaries.

“It is absolutely what one should do in such a case,” said Marc Bonnant, Steinmetz’s Geneva-based lawyer and a Balda trustee, adding that he didn’t know about the inquiry.

Client Investigations

Steinmetz will probably help any internal investigation even though he has no obligation to do so, Bonnant said. “Beny Steinmetz is not part of BSGR, so I don’t see why he should be interrogated by anybody,” he said.

Lieberman, 72, conducts investigations for clients of Kasowitz, Benson, Torres & Friedman LLP, according to the New York-based law firm’s website. He joined the organization last year after serving for five years as Connecticut State Attorney-General and 24 years as a Senator. He was the Democratic party’s vice-presidential candidate in 2000, running alongside Al Gore.

After eight years leading the Federal Bureau of Investigation, Freeh in 2007 founded Freeh Group International Solutions LLC, a consulting firm that carries out investigations and due diligence for clients. It merged with Pennsylvania-based law firm Pepper Hamilton LLP in 2012.

Freeh, 64, previously served as a judge in the Southern District of New York, where Rio’s case against BSGR and others is being heard.

Mining Giants

The New York case also pits two of the three largest publicly traded mining companies against each other. Rio de Janeiro-based Vale SA, the third-biggest listed miner, is one of the defendants in the case brought by larger rival, Rio Tinto, after BSGR sold the Brazilian company a controlling stake in the asset for $2.5 billion. Most of that was never paid.

Guinea’s government in April annulled BSGR and Vale’s rights to their share of Simandou, saying the Guernsey-incorporated company used corruption when it acquired the deposit in 2008.

A U.S. judge in July sentenced Frenchman Frederic Cilins to two years in prison for trying to bribe Mamadie Toure, the fourth wife of deceased Guinean President Lansana Conte, to destroy evidence and lie to investigators looking into the corruption claims surrounding BSGR’s acquisition of Simandou.

Court Filing

A network of international businesses and Guinean and South African officials were aware of the “corrupt rigging” of Guinea’s 2010 elections, which precipitated the “wrongful misappropriation” of BSGR’s Simandou rights, lawyers for BSGR said in a Sept. 3 New York court filing.

Vale spokesmen in Brazil, Mozambique and Australia didn’t answer calls seeking comment. The company said in April that Guinea had cleared Vale of any wrongdoing in connection with Simandou.

BSGR said yesterday that it has filed an arbitration request with the International Centre for Settlement of Investment Disputes against the nation of Guinea. The company’s rights to the Simandou project were confiscated illegally “through a deeply flawed process based on unreliable and untested evidence,” according to an e-mailed statement.

None of BSGR’s statements and evidence respond in any way to the specific allegations made against the company, “which led Guinea to terminate and rescind these same rights and titles,” Damatang Albert Camara, a spokesman for the government of Guinea, said in a statement the same day.